Bangkok--Feb 3--PC & Associates Consulting
- Revenue of $204.3 million for the quarter; Growth of 34% versus Q4 2003
- Revenue of $685.5 million for 2004; Growth of 35% versus 2003
- Net Increase in Deferred Revenue of $67.7 million for the quarter and $133.7 million for 2004
- Earnings Per Share for the quarter: $0.36 GAAP; $0.42 Non-GAAP
- Earnings Per Share for the year ended 2004: $0.83 GAAP; $1.09 Non-GAAP
- Cash Flows from Operations: $66.4 million for the quarter and $212.8 million for 2004
Mercury Interactive Corporation (NASDAQ: MERQ), the global leader in business technology optimization (BTO), today announced financial results for the fourth quarter and year ended December 31, 2004.
Revenue for the fourth quarter of 2004 was $204.3 million, an increase of 34 percent compared to $152.0 million reported in the fourth quarter of 2003. Revenue for the year ended December 31, 2004 was $685.5 million, an increase of 35 percent compared to $506.5 million reported for the year ended December 31, 2003.
Deferred revenue for the fourth quarter of 2004 increased by $67.7 million from the third quarter of 2004 to $414.3 million. Cash generated from operations for the fourth quarter of 2004 was $66.4 million compared to $66.9 million in the fourth quarter of 2003. Cash generated from operations for the year ended December 31, 2004 was $212.8 million, compared to $180.5 million for the year ended December 31, 2003.
“2004 was our most successful year ever,” said Amnon Landan, chairman and CEO at Mercury. “Our customers are expanding their investments in Mercury Optimization Center offerings as they take an enterprise approach to streamlining IT.”
GAAP RESULTS
Net income for the fourth quarter of 2004 was $35.0 million, or $0.36 per diluted share, compared to $13.1 million, or $0.13 per diluted share, for the same period a year ago. Net income for the year ended December 31, 2004 was $84.6 million, or $0.83 per diluted share, compared to $41.5 million, or $0.41 per diluted share, for the year ended December 31, 2003.
Diluted earnings per share was calculated taking into consideration the recent issuance of EITF 04-08, “Effect of Contingently Convertible Debt on Diluted Earnings per Share.” Net income was adjusted for debt related costs on an ‘as if’ converted basis by $0.4 million and $1.4 million for the quarter and year ended December 31, 2004, respectively. Fully diluted shares were 98.2 million shares for the quarter and 103.2 million shares for the year ended December 31, 2004. Previously reported net income and diluted earnings per share have also been restated based on the effect of EITF 04- 08.
NON-GAAP RESULTS
Non-GAAP net income for the fourth quarter of 2004 was $40.5 million, or $0.42 per diluted share, compared to $26.2 million, or $0.25 per diluted share, for the same period a year ago. Non-GAAP results for the fourth quarter of 2004, as presented in the attached reconciliation table, exclude stock-based compensation and amortization of intangibles of $4.1 million, a non-cash reduction to excess facility charge of approximately $0.2 million, a net loss on investments in non-consolidated companies and warrant of $0.1 million and related tax expense decrease of $1.5 million.
Non-GAAP net income for the year ended December 31, 2004 was $110.6 million, or $1.09 per diluted share, compared to $86.1 million, or $0.85 per diluted share, for the year ended December 31, 2003. Non-GAAP results for the year ended December 31, 2004, as presented in the attached reconciliation table, exclude stock-based compensation and amortization of intangibles of $16.4 million, in-process research and development of $0.9 million, integration and other acquisition related charges of $3.1 million, a net non-cash excess facilities charge of $8.9 million, a gain on sale of available-for-sale securities of $0.3 million, a net loss on investments in nonconsolidated companies and warrant of $0.6 million and related tax expense increase of $3.6 million.
Based on the effect of EITF 04-08, non-GAAP net income and fully diluted shares were also adjusted in the calculation of diluted earnings per share by the same amounts GAAP diluted earnings per share were adjusted. In addition, previously reported non-GAAP net income and diluted earnings per share have been restated.
FINANCIAL OUTLOOK
The following financial outlook is provided based on information as of February 2, 2005 and management assumes no duty to update this guidance.
Management provides the following guidance for the first quarter of 2005:
- Revenue for the first quarter is expected to be in the range of $190 million to $200 million
- Net increase in deferred revenue for the first quarter is expected to be in the range of $5 million to $15 million
- GAAP diluted earnings per share for the first quarter is expected to be in the range of $0.26 to $0.32
- Non-GAAP diluted earnings per share for the first quarter is expected to be in the range of $0.28 to $0.34
- Fully diluted shares outstanding for the first quarter is expected to be in the range of 98 million to 100 million, which takes into consideration the recent issuance of EITF 04-08, “Effect of Contingently Convertible Debt on Diluted Earnings per Share.”
Non-GAAP guidance for the first quarter of 2005 is adjusted from GAAP guidance by excluding stock-based compensation and amortization of intangible assets of $4.0 million and a gain on the sale of our idle building of approximately $0.3 million.
Management provides the following guidance for the full year of 2005:
- New Order Growth (revenue plus change in deferred revenue) for the full year is expected to be in the range of 20 percent to 25 percent
- Revenue growth for the full year is expected to be in the range of 28 percent to 32 percent
- Non-GAAP operating margin for the full year is expected to be in the range of 20 percent to 21 percent
- GAAP diluted earnings per share for the full year is expected to be in the range of $1.36 to $1.46
- Non-GAAP diluted earnings per share for the full year is expected to be in the range of $1.45 to $1.55 Cash flow from operations growth for the full year is expected to be in the range of 25 percent to 30 percent
Non-GAAP guidance for 2005 is adjusted from GAAP guidance by excluding stockbased compensation and amortization of intangible assets of $15.8 million and a gain on the sale of our idle building of approximately $0.3 million.
QUARTERLY CONFERENCE CALL
Mercury will host a conference call to discuss fourth quarter results at 2:00 p.m. Pacific Time today. A live Webcast of the conference call, together with supplemental financial information, can be accessed through the company's Investor Relations Web site at http://www.mercury.com/ir. In addition, an archive of the Webcast can be accessed through the same link. An audio replay of the call will be available until midnight on February 8, 2005. The audio replay can be accessed by calling 888-203-1112 or 719-457-0820, conference call code: 390468.
ABOUT MERCURY
Mercury Interactive (NASDAQ: MERQ), the global leader in business technology optimization (BTO), is committed to helping customers optimize the business value of information technology. Founded in 1989, Mercury conducts business worldwide and is one of the fastest growing enterprise software companies today. Mercury provides software and services to govern the priorities, people, and processes of IT; deliver and manage applications; and integrate IT strategy and execution. Customers worldwide rely on Mercury offerings to improve quality and performance of applications and manage IT costs, risks and compliance. Mercury BTO offerings are complemented by technologies and services from global business partners. For more information, please visit www.mercury.com.
FORWARD LOOKING STATEMENTS
This press release contains "forward-looking statements" under the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties concerning Mercury’s expected financial performance, as well as Mercury’s future business prospects and product and service offerings. Mercury’s actual results may differ materially from the results predicted or from any other forward-looking statements made by, or on behalf of, Mercury and reported results should not be considered as an indication of future performance. The potential risks and uncertainties include, among other things: 1) the mix of perpetual and term licenses and the effect of the timing of the recognition of revenue from products sold under term licenses; 2) Mercury has historically received a substantial portion of its orders at the end of the quarter and if an order shortfall occurs at the end of a quarter it could negatively impact its operating results for that quarter; 3) the dependence of Mercury’s financial growth on the continued success and acceptance of its existing and new software products and services, and the success of its BTO strategy; 4) the impact of any acquisitions or business combinations and uncertainties related to the integration of products and services, employees and operations as a result of acquisitions, including the acquisition of Appilog; 5) the ability to attract and retain key personnel; 6) intense competition for Mercury’s products and services; 7) the impact related to the expensing of stock options and stock purchases under Mercury's employee stock purchase program under Financial Accounting Standards Board's Statement 123R, which is effective for quarters beginning after June 15, 2005; and 8) the additional risks and important factors described in Mercury’s SEC reports, including the Annual Report to Stockholders on Form 10-K for the fiscal year ended December 31, 2003, and the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2004, which are available at the SEC’s website at www.sec.gov. All of the information in this press release is made as of February 2, 2005, and Mercury undertakes no duty to update this information.
NON-GAAP FINANCIAL INFORMATION
Mercury evaluates its operations primarily based on GAAP results. In addition, Mercury’s management believes it is useful to assess Mercury’s performance based on non-GAAP results, which exclude charges for either (i) acquisitions by Mercury (such as in-process research and development, integration and other related charges, stockbased compensation and amortization of intangible assets), (ii) excess facilities charges, (iii) gain on sale of available-for-sale securities; (iv) losses on investments in non-consolidated companies, (v) executive severance (vi) provision for income taxes, or (vii) stock-based compensation related to modification of stock options. These charges are excluded because they are not considered to be ordinary and direct costs of Mercury.
Mercury’s management uses the non-GAAP results in its own evaluation of performance and as an additional base line for assessing Mercury’s future earnings potential. Mercury’s management also uses the non-GAAP results for budget planning purposes on a quarterly basis for determining executive compensation.
Although Mercury’s management finds its non-GAAP results useful in evaluating the performance of its business, its reliance on this measure is limited because items excluded from such measures often have a material impact on Mercury’s net income and net income per share calculated in accordance with GAAP. Therefore, Mercury’s management typically uses its non-GAAP results in conjunction with GAAP results, to address these limitations.
While the GAAP results are more complete, Mercury prefers to allow investors to have this supplemental measure since, with the reconciliation from non-GAAP to GAAP financial information, it may provide additional insight into its financial results. Mercury believes that presenting the non-GAAP results provides investors with an additional tool for evaluating the performance of its business. The non-GAAP financial measures are presented by Mercury in order to give investors further information about historical and expected results and increase their ability to compare financial information from period to period.
Editor’s Note
Tables Attached: Condensed Consolidated Statements of Operations, Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Cash Flows, Table of Reconciliation from GAAP to Non-GAAP.
Mercury, Mercury Interactive and the Mercury logo are trademarks or registered trademarks of Mercury Interactive Corporation in the United States and/or other countries. Other product and company names are used herein for identification purposes only, and may be trademarks of their respective companies.
MERCURY INTERACTIVE CORPORATION
379 N. Whisman Road
Mountain View, CA 94043
Tel: (650) 603-5200 Fax: (650) 603-5300
www.mercury.com
Editorial Contacts:
Darryl Dickens, 65.9010.2890
Mercury
[email protected]
Press Release issued by:
PC & Associates Consulting Co., Ltd.
Pranee Chalermtanasak
Tel: 0 2971 3711 Fax: 0 2521 9030
email: [email protected] End.